Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Consumer money transfer transactions grew at 5% in the quarter, excluding Iraq.
- Achieved positive adjusted revenue growth for the first time since 2021, excluding Iraq.
- Branded digital adjusted revenue was up 7% in the second quarter with transaction growth of 13%.
- Consumer Services segment generated 14% adjusted revenue growth in the second quarter.
- Net new independent agent activations in the US were up nearly 50% year-over-year.
Negative Points
- Total revenue decreased by 7% on an adjusted basis due to the decline in Iraq revenue.
- Adjusted operating margins decreased to 19% from 21.8% last year.
- Earnings per share decreased to $0.44 from $0.51 last year.
- Retail transaction trends remained flat, showing no significant growth.
- Foreign exchange volatility negatively impacted margins.
Q & A Highlights
Q: Can you elaborate on the pricing dynamics and competitive landscape in the remittance industry?
A: Devin McGranahan, CEO: The global trend lines indicate some alleviation in price compression. While specific competitors in certain markets may take aggressive actions, the overall market is stabilizing. Smaller, corridor-specific specialists are becoming more rational or exiting the market.
Q: What are your expectations for the trajectory of retail versus digital transactions?
A: Matthew Cagwin, CFO: We have sustained double-digit branded digital transaction growth for five consecutive quarters and stable retail transaction trends. We expect continued progress in both areas, driven by initiatives like Quick Resend and improvements in our digital business.
Q: How did second-quarter margins compare to your plan, and what are the expectations for the second half?
A: Matthew Cagwin, CFO: Margins faced a headwind from foreign currency volatility, particularly the appreciation of the Mexican peso. However, we are confident in our 19% to 21% margin outlook for the year.
Q: Can you provide more details on the positive results in the Consumer Services segment?
A: Devin McGranahan, CEO: We saw solid growth in retail money orders and our ForEx business in Europe. New initiatives like prepaid debit cards and media networks are gaining traction. Despite challenges in Argentina, we expect double-digit growth to continue.
Q: What are your expectations for Iraq revenues going forward?
A: Matthew Cagwin, CFO: We expect Iraq revenues to be in the range of $10 million to $30 million per quarter for the remainder of the year. The market remains volatile, but we believe this range is reasonable.
Q: How are you prioritizing capital allocation between M&A and share buybacks?
A: Devin McGranahan, CEO: We are focused on disciplined capital allocation. With the stability in our core business, we are confident in executing M&A transactions that drive value. However, we remain open to share buybacks if the right opportunities do not materialize.
Q: Is it time to increase digital marketing investment given the positive results?
A: Devin McGranahan, CEO: We vary our digital marketing spend based on opportunities and maintain a disciplined LTV to CAC approach. We will invest more when we see opportunities that meet our criteria.
Q: What impact do you expect from the rationalization of retail agent activations?
A: Devin McGranahan, CEO: We focus on productive agent locations rather than total count. This approach has helped improve our retail results, and we expect it to continue driving growth in both the US and Europe.
Q: Can you comment on the impact of Argentina's inflation and currency on branded digital revenues?
A: Matthew Cagwin, CFO: Argentina's inflation and currency have had a significant impact. However, our forecasts are foreign currency agnostic, and we continue to monitor the situation closely.
Q: What are your thoughts on the World Bank's expectation of accelerating remittance growth?
A: Devin McGranahan, CEO: We are positive about the remittance industry's outlook. Despite concerns about inflation, our customers have proven resilient. Migration trends remain steady, and we expect continued growth in the foreseeable future.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
